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MUMBAI: Zerodha's Nitin Kamath has estimated that 60 per cent of F&O trades will be affected as a result of the restrictive measures taken by capital markets regulator SEBI on Tuesday to stop youngsters from trading in futures and options (F&Os). Making entry difficult.
As Kamath predicted on social media platform X, people who trade weekly will not switch to monthly trading. In such a situation, 60 percent trading of F&O will be affected. Zerodha has not yet announced any changes in its pricing structure. After the implementation of these new rules on November 20, the company will take a decision regarding increase in brokerage based on the impact on business.
Let us tell you that on Tuesday, SEBI has taken six big steps and increased the minimum contract size to Rs 15 lakh. and limited the number of contracts with weekly expiration. Which is likely to affect the trading volume. Currently, the size of index F&O contracts ranges between Rs 5 lakh to Rs 10 lakh. The minimum contract value will increase to between Rs 15 lakh and Rs 20 lakh from November 20, 2024.
So the lot size for index F&O contracts will increase and as a result the margin requirement will also increase accordingly. Increasing the lot size will result in skewed lots in the current situation in long term options trading.
At present four indices of NSE and two indices of BSE have weekly expiry. According to the new rules, stock exchanges will be able to offer only one weekly expiry contract. Whereas there has been no change in the monthly contract.
NSE dominated F&O with an average of Rs 10.8 billion equity derivatives trades per month in FY24. Although trading at GIFT City is growing, it still accounts for less than one per cent of NSE's volume and sees around two million trades per month.
SEBI's move will have less impact on BSE than NSE as its dependence on the number of index options expiring in a week is comparatively less. NSE's revenue from transaction fees in Q1FY25 stood at Rs. 3,623 crore, whereas in case of BSE it is Rs. 366 crores. The F&O segment has a major share in this and has increased due to increased activities.